Sector Rotation

Big money at times play game of musical chairs. You can benefit from it if you can increase and decrease your exposure as per rotation. It also pays to know the sector leaders. Just to give you an example of Solar sector. FSLR is the obvious leader in the sector. When the group was running it outperformed most of its peers. Whether the run will continue in the sector will most probably depend on FSLR earnings next week. I am doing a small exercise of making a draft list of sectors and handful of stocks that I would like to buy if I think it is the right time to be 'over weight' in the sector.

Solars : FSLR, [JASO, STP, SPWR]
Spec. Solars: ASTI, SOLF
Alt Energy: GEX, TAN
Hw Tech: AAPL, RIMM
Gen Tech: QLD
Sw Tech: GOOG, CRM
Oil & Ser: PBR, RIG
N.Gas: CHK, EOG, UNG
China: LFC, FXI
Agri: POT, MOS
PM: AEM, SLV
Trans: TBSI, DRYS
Minn: BUCY
Coal: ANR
Steel: MTL
Alum: CENX
Grains: DBA
Financ: MA
Medical: ISRG

Of the above sectors, I think two clear IN sectors are China and Trans. Now Agri sector saw some profit taking today but I am sure that the fundamentals will make them run again. PM sector is getting attactive. Lets see how things develop tomorrow.

One strategy could be to have small core position in above names when they pullback to some support and keep the core position for long run. Then to add more position size if the sector is IN and selling the extra position when the secotr become OUT. Now its easier said then done but I think it should work with less risk. However, this strategy needs little more polishing.